Argentina steps up pressure on UK over Falklands

http://www.iiss.org/publications/strategic-comments/past-issues/volume-18-2012/march/argentina-steps-up-pressure-on-uk-over-falklands/

As the 30th anniversary of the Falklands War approaches, Argentina has adopted an increasingly assertive strategy of regional diplomacy and economic pressure to draw attention to its long-running row with the United Kingdom over the islands. The dispute over the desolate archipelago in the South Atlantic, inhabited by about 3,000 people and 600,000 sheep, is no longer just a matter of national pride over a vestige of empire. It is being cast by Buenos Aires as a high-stakes scramble for substantial oil reserves that are believed to lie beneath the waters surrounding the islands.

The government of President Cristina Kirchner is seeking to pressure the UK government into accepting negotiations over the sovereignty of the islands. But unlike 1982, when invading troops were driven out by a British task force, Argentina's current strategy is focused not on military deployments but on diplomatic and economic initiatives. Buenos Aires hopes to harness the emerging global clout of Latin American countries to strengthen its position. However, the steps it has taken so far to embarrass the UK have had little impact.

Las Malvinas, as the islands are called in Argentina, have long been a nationalist cause for Argentine leaders seeking to bolster their domestic political positions. This has been particularly true of the Kirchner era, especially under Cristina, who was elected in 2007 to succeed her husband Nestor (who later died). As the 30th anniversary approaches, she has made a series of speeches and diplomatic manoeuvres in an effort to draw attention to the issue. Calling Britain a 'crude colonial power in decline', Kirchner said she would take Britain's 'militarisation' of the dispute to the United Nations after the new destroyer HMS Dauntless was deployed in 2012 as part of a regular South Atlantic naval patrol. Also fanning the populist flames was the routine posting to the Falklands of Prince William, a Royal Air Force search-and-rescue helicopter pilot who is second in line to Queen Elizabeth's throne.

Oil prospects

In 2010, British company Rockhopper announced the discovery of the Sea Lion oil field 80 miles offshore in the North Falkland Basin, and other companies showed renewed interest in exploring the surrounding waters. Argentina responded by insisting that ships wishing to transit its waters to the islands must obtain its authorisation. In 2011, new evidence reinforced the potential of the oil fields. Rockhopper announced plans to start production in 2016, with a planned output of up to 120,000 barrels per day. Rockhopper now projects that almost 450 million barrels can be recovered from its Sea Lion find.

Further exploration projects set for this year will focus on the areas to the south and east of the islands, enabled by the arrival of the Leiv Eiriksson harsh environment rig in January. The waters are deeper here and the maritime conditions more difficult, meaning that exploring these reserves is more challenging and expensive, but the prize is even larger. According to a report by Edison Investment Research, the drill target for the Southern Basin alone is approximately 8bn barrels.

The Loligo well, currently being explored by Falkland Oil and Gas Limited east of the islands, is expected to contain 4.7bn barrels, which makes it one of the largest drill targets in the world.

The Leiv Eiriksson rig will also drill two wells for Borders & Southern Petroleum plc in the Southern Basin. The Darwin project, which the company believes holds as much as 760m barrels, is already being drilled. Afterwards, the rig will move to Stebbing, which has a target of 1.2bn barrels.

These explorations are already raising tensions in the region. On 16 February, citing 'irrefutable satellite images', Argentine newspaper Ámbito Financiero said that the Leiv Eiriksson rig along with three support ships had violated Argentine territorial waters by entering its exclusive economic zone.

Until 2007, Argentina and the UK had an agreement under which they pledged to cooperate in exploring the region's oil resources. The Joint Declaration on Cooperation in Offshore Activities in the Southwest Atlantic was signed on 27 September 1995. The government of Carlos Menem signed the agreement in the belief that it was central to a peaceful solution to the dispute, but Buenos Aires withdrew in March 2007 as the 25th anniversary of the war approached, and as the UK government moved to grant licences for oil exploration around the Falklands.

Diplomatic sparring

As the economic prospects of the Falklands grew, Argentina launched a regional diplomatic offensive to pressure the UK into sovereignty negotiations. It sought to draw neighbouring countries into the dispute by arguing that the British presence was aimed at extracting the South Atlantic's resources and was, therefore, of concern to the entire region. At a December 2011 meeting of the Mercosur trade bloc (which includes Argentina, Brazil, Paraguay and Uruguay), Kirchner said: 'Malvinas is not an Argentine issue, it is a global issue because they are taking energy and fishing resources out of the Malvinas.'

Buenos Aires gained support in the form of public statements during summits of heads of state not only from Mercosur, but also from the 12-member Unasur (Union of South American Nations), the 8-member Alba (Bolivarian Alliance for the Peoples of Our America) and the 33 members of the newly formed Community of Latin American and Caribbean States. The 34-nation Organisation of American States released a statement in February reiterating its call for negotiations, and its secretary-general, Jose Miguel Insulza, criticised the UK for adopting a 'bellicose tone' by sending the HMS Dauntless.

Kirchner is not only drawing on a traditional aversion to colonialism, but also on recent advances towards regional integration. There has been a flurry of summits and trade agreements, and a regional development bank, the Bank of the South, has been established. These moves towards a regional community and identity were spurred on to a large extent by former Brazilian President Luis Inacio Lula da Silva, who forecast that 'South America, united, will move the board game of power in the world.'

Though the measures taken so far by regional organisations have little practical impact, they constitute the strongest signals of support for Argentina in decades. Individual governments have also taken symbolic steps: in January 2011, Brazil denied permission for the HMS Clyde patrol ship to dock at Rio de Janeiro during a Falklands mission, the first time that Brazil had closed its ports to a British ship. However, the Clyde was the offshore patrol ship with specific responsibility for the Falklands, and Brazil has continued to accept port visits from other Royal Navy vessels and is also purchasing three UK-built patrol vessels. In December, Brazil and Uruguay agreed to ban from their ports ships bearing the flag of the Falkland Islands, a decision that was followed by Chile and Venezuela. However, this affects only 25 vessels, mostly fishing boats, and the islanders plan to circumvent the ban by adopting the Red Ensign flown by the UK merchant navy. Buenos Aires has also sought to persuade its neighbours to end military-to-military links with the United Kingdom, but has not succeeded in doing so.

On the domestic front, Argentina has taken further steps to isolate the UK. In February, Industry Minister Debora Giorgi asked 20 companies dealing with the UK to replace British imports with goods from 'nations that respect the territorial integrity' of Argentina. Even if all companies complied, this would cause little harm to the UK economy, since Argentina accounts for 0.3% of UK non-EU exports. Argentina also denied permission for two cruise ships flying British flags to dock at Ushuaia, because they had previously been to Port Stanley in the Falklands. In addition, islanders complain that the Argentine government is putting pressure on freight-container companies by threatening to deny them lucrative deals if they continue to do business in the Falklands. According to Falkland islanders, these measures amount to a de facto economic blockade.

Expressions of support for Argentina's cause by regional leaders such as Hugo Chavez of Venezuela and Rafael Correa of Ecuador (who suggested that the Bolivarian Alliance bloc should impose sanctions on the UK) were important in prompting Brazil – the region's biggest power and a traditional leader of South American integration – to back the diplomatic offensive, even if this risked cooling relations with the UK. Even Chile, which had previously resisted pressure to isolate the islands, joined practically all regional demonstrations of support for Argentina, which resulted in a phone call from UK Prime Minister David Cameron to Chilean President Sebastian Pinera. The head of the Chilean Senate's Foreign Relations Committee, Eugenio Tuma, said legislators would 'continue to support any action with the aim of persuading the United Kingdom to solve the conflict'.

While evoking its old colonialism argument, deploying the geopolitics of oil and drawing on regional cooperation, Buenos Aires is seeking to raise the political and economic cost of the UK's presence in the area. Jorge Arguello,Argentina's ambassador to Washington, said in an interview: 'We have an objective which is to reduce the margin of British resistance to comply with UN resolutions. We want them [the UK] to become alone and isolated.' While this goal is far from being achieved, diplomatic difficulties have been created for London just at a time when it has elevated relations with the region to priority status. Foreign Secretary William Hague announced in January the start of 'Britain's most ambitious effort to strengthen ties with Latin America in 200 years.'

The UK has begun what Hague calls a 'strategic dialogue' with Brazil and has set the goal of doubling bilateral trade by 2015. During a visit in January, Hague reiterated the UK's support for Brazil as a prospective permanent member of the UN Security Council. However, the rapid pace of regional integration means that Brazil and other regional powers are under greater pressure to factor Argentine interests into their strategic calculations.

Peru is the latest country to give in to such pressures – on 19 March it cancelled a scheduled visit by the Type 23 frigate HMS Montrose, which had been taking part in a regular patrol of the South Atlantic. President Ollanta Humala had risked regional isolation if he accepted the frigate, since his position was seen as contradicting recent agreements and statements on the issue. He also declined an invitation to travel to the UK in April, a visit bound to cause tension because of the anniversary of the 1982 war.

Military assets

Argentina has been careful to avoid making threats to capture the islands by force, and another military confrontation remains unlikely. Though it has capable special-operations teams, the majority of its heavy military equipment still dates back to the 1970s and 1980s. The navy constructed ten new surface combatants, as well as two new submarines, in the mid-1980s, all based on German designs, but there have been few changes to its inventory since then. The air force and naval aviation combat inventories are in even worse shape, with the only major acquisition post-1982 being 36 modernised versions of the 1950s vintage A-4 Skyhawk

If any hostilities did take place, the Argentine military would find the British military garrison – as well as civil security capabilities – far stronger than they were in 1982. The Falklands is now home to an army infantry company, a Rapier surface-to-air missile battery, four Typhoon fighter aircraft and a significantly improved air-surveillance capability. At sea, in addition to the resident patrol vessel HMS Clyde, the Royal Navy also has the auxiliary tanker RFA Gold Rover and the Type 45 destroyer HMS Dauntless in the South Atlantic. As well as superior heavy equipment, the British armed forces have surveillance assets, precision-guided weapons and substantial recent experience of combat that would have a significant impact against Argentina's outdated capabilities. This presence is intended to reassure the Falkland islanders – who have clearly signalled their intent to remain part of UK overseas territories – as well as to deter Argentina.

The UK, however, is in the midst of a programme of defence spending cuts that have deprived it of maritime patrol aircraft and, for the next decade, an aircraft carrier. A number of former top military officers have expressed concern that, if Argentina were to capture the Falklands, Britain's weakened armed forces would be unable to take them back. The response of British defence officials has been to state that they do not envisage any scenario in which the Falklands would have to be recaptured. Certainly, given the superior UK capabilities and experience, it would now be a much greater challenge for Argentina to invade successfully. In addition, an Argentine attack would undermine the Kirchner government's attempt to portray the British as twenty-first-century 'colonialist' aggressors, making an invasion not only strategically unwise, but also politically counter-productive.

Brazil's pivotal role

The recent diplomatic and economic offensive by Argentina has had little impact so far, and its moves at the UN are unlikely to change the strategic picture. That is why Kirchner has insisted on framing the dispute as a resource conflict and intensified her calls for regional backing. While Argentina has won limited support, there seems to be an element of lip service being paid. But the strategy might work if Kirchner can persuade other regional heavyweights, especially Brazil, to get involved in the dispute. Brazil is showing a greater interest in the South Atlantic, which was listed as a priority in the latest National Defence Strategy. Petrobras, Brazil's state-owned oil giant, has teamed up with other companies to drill off the southern Argentine coast, though a well drilled last year proved dry. Brazilian President Dilma Roussef last year branded UK oil exploration in the region 'illegal activities'. Since Argentina has employed in a regional strategy aimed at isolating London, Brasilia has become a key battleground in the long-running dispute.